The sharing economy as a disruptor

Sharing economy companies have found a way to enter existing markets with historically high entry barriers. Take for example Airbnb, an “accommodation sharing” platform, which has gained more market worth than the world’s fourth largest hotel chain Marriot. While Airbnb was founded only in 2008, Marriot has been around since 1927. Some call the uptake of sharing platforms a “market disruption.” Along with Airbnb, Uber, the taxi-hailing company, is also often mentioned. However, there is more to the sharing economy than Airbnb and Uber, and there is more to the disruption than the talked-about market disruption.

When I talk about disruption in a recent paper co-authored with Assistant Professor Yuliya Voytenko Palgan and Professor Oksana Mont, I mean the change in direction of established rules, norms or values. The sharing economy has proved that it can disrupt all of the above. This disruption has not happened accidentally. Platform owners and their proponents are engaging in so-called institutional work to upscale, mainstream and normalise this new phenomenon.

To disrupt regulatory frameworks, sharing organisations are lobbying local governments to secure better legal conditions. Where lobbying did not prove successful, some companies resorted to taking legal action against local legislations. As municipalities find it difficult to regulate specific sharing platforms (and there is debate about whether they even have the jurisdiction to do so), we will see the battle move from European cities to the European court.

Sharing organisations are also changing normative institutions, or things that we consider “normal.” Personal belongings are now shared online by people who previously never thought of sharing them with strangers. Furthermore, the lender is sometimes paid by the borrower, but rather than calling this exchange “renting,” sharing platforms and their proponents have pushed for it to be called “sharing,” free-riding on its positive connotations.

Furthermore, sharing organisations try to mainstream the sharing economy by drawing on taken-for-granted practices. For example, they identify with certain pro-social or pro-environmental values to ease adoption, improve acceptance and ensure long-term survival. There is an abundance of sharing companies that claim to be “good for the environment” or “an asset to local communities.” They also join industry associations, which gives them stronger bargaining power. In many ways, they are mimicking the practices of many successful multi-national companies to normalise “sharing.”

Small-scale, community-based sharing initiatives such as neighbourhood tool-, knowledge- or food- sharing have become mainstreamed to a much lesser extent than their for-profit counterparts. This is because they lack the resources (both monetary and non-monetary) that for-profit sharing companies have an abundance of.

For-profits have more resources to engage in lobbying or litigation. They often mimic practices or structures of their incumbent counterparts in order to gain legitimacy. Non-profits, on the other hand, often gain legitimacy by being distinctly different from the mainstream companies and offering a truly new alternative consumption pathway. Therefore, they have much larger potential to disrupt the institutions associated with resource distribution. However, they lack the power and resources to engage in political work, as well as the support of existing institutions.